MUNICH AS A GROWING HOTSPOT FOR INNOVATION AND ENTREPRENEURSHIP - WHITE PAPER - OBSERVATIONS ON THE MUNICH INNOVATION ECOSYSTEM - MUST Munich
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2021 MUNICH IS WAITING FOR YOU ... SO WHAT ARE YOU WAITING FOR? MUNICH AS A GROWING HOTSPOT FOR INNOVATION AND ENTREPRENEURSHIP WHITE PAPER – OBSERVATIONS ON THE MUNICH INNOVATION ECOSYSTEM
Authors: Dr. Dominik B. Domnik, Katja Werner – MUC SUMMIT GmbH Michael Birlbauer, Helena Meerpohl, Julia Ochsenmeier – PwC Publishers: Frizzi Engler-Hamm, Matthias Notz CEO / Geschäftsführung MUC Summit GmbH Freddie-Mercury- Straße 5 | 80797 München contact@muc-summit.com www.must-munich.com Published: October 2021 2
CONTENTS
LIST OF FIGURES 4
EXECUTIVE SUMMARY 5
INTRODUCTION AND APPROACH 6
PROPOSITION 1: MUNICH IS A TECH HUB 8
PROPOSITION 2: MUNICH IS A STRONG RESEARCH LOCATION 12
PROPOSITION 3: MUNICH IS A STRONG BUSINESS LOCATION 16
PROPOSITION 4: MUNICH POSSESSES A HIGH DEGREE OF NETWORKING
AMONG ITS STAKEHOLDER GROUPS 19
PROPOSITION 5: MUNICH OFFERS A HIGH QUALITY OF LIFE 21
PROPOSITION 6: MUNICH HAS A LARGE AMOUNT OF INNOVATION CAPITAL
AT ITS DISPOSAL 24
PROPOSITION 7: MUNICH CAN PLAY A PIONEERING ROLE
IN ACHIEVING THE UN SDGS 27
RECOMMENDATION FOR ACTION 30
1. CREATING A BETTER CULTURE OF INNOVATION 30
2. CREATING AFFORDABLE LIVING, WORKING AND CREATIVE SPACE 32
3. IMPROVING LOCATIONAL MARKETING AND DEVELOPING
A COMPREHENSIVE LOCATION STRATEGY 32
4. JOINT VALUE CREATION IN THE NETWORK
VIA PLATFORM SOLUTIONS 33
5. OPENING UP AND TARGETED INCREASE IN DIVERSITY 34
CONCLUSION AND OUTLOOK 35
LIST OF INTERVIEW PARTNERS 35
3LIST OF FIGURES Fig. 1: Value creation process in ecosystems 7 Fig. 2: Essential advantages enabling Munich to position itself as a tech hub 9 Fig. 3: Number of technology areas 12 Fig. 4: Students at Munich’s institutions of higher education 13 Fig. 5: The Munich mix – a multilayered economic structure 17 Fig. 6: Munich’s great network connections within the EU 21 Fig. 7: Rent load by housing situation in the City of Munich 22 Fig. 8: Monetary support for implementation 24 Fig. 9: UN Sustainable Development Goals 28 4
EXECUTIVE
SUMMARY
Time and again, Munich achieves top positions in city rankings – as was again the case in 2020: The IW
Consult city ranking placed the Bavarian capital at the top in such categories as economic strength and
dynamics in terms of its labor market, economic structure, real estate market and quality of life1. But does
this also automatically imply ideal conditions for an entrepreneurship and innovation ecosystem? This white
paper looks at Munich as a location and addresses this question – investigating such aspects as networks,
sustainability, the industrial sector and the startup scene. As part of this process, Munich’s attractiveness in
a wide range of areas has become very clear. However, one specific problem has also emerged: The city’s
profile in the innovation and entrepreneurship ecosystem is not yet differentiated enough and its potential –
at both the national and international level – is not yet widely known. To sharpen the focus in this field, this
white paper concludes with recommendations for action in the areas of politics and business as well as for
professional chambers and all stakeholders with an interest in shaping the future and advancement of Munich.
Specifically, we’re seeing a need to expand the City of Munich’s strategy in the following areas:
1. Creating a better culture of innovation by promoting entrepreneurship on the part of universities
and improving access to capital
2. Establishing more living, working and creative space
3. Improving location marketing and introducing a holistic location strategy
4. Increasing the degree of networking between the various local, national and international
initiatives by introducing suitable platforms
5. Increasing diversity in a targeted manner by facilitating qualified migration and systematically
promoting women
What’s more, considering local innovation policy beyond purely economic determinants would additionally
stimulate a spirit of innovation and lead to greater social cohesion and a more resilient urban society overall.
The challenges described in the United Nations’ Sustainable Development Goals (SDGs) are also suggestive
of the typical issues that modern cities will need to tackle in the future. The topics mentioned above must be
bundled and all stakeholders must be addressed cross-sectorially – to represent Munich internationally as an
innovation and entrepreneurship location, to provide globally mobile talent with excellent reasons to settle
in Munich, and to make any kind of investment in the city palatable to players from the innovation area. Only
through coordinated action can Munich position itself as a globally noticeable innovation ecosystem, thereby
ensuring its future development and competitiveness.
The following vision for Munich was adopted as part of a strategy process in which 45 participants
from science, industry, the startup scene and politics were involved:
„Munich’s innovative, open-minded, and diverse community brings together international young talent,
startups, and established companies. Together, they co-create scalable innovation that strives toward the
Sustainable Development Goals. This unique blend of academia, industry, startups, government, science
and society offers a unique high-tech based ecosystem in one of the most livable cities in the world.“
1
https://www.muenchen.de/rathaus/wirtschaft/wirtschaftsstandort/ranking.html 5INTRODUCTION AND APPROACH München, Munich, Monaco di Baviera or 慕尼黑 [mùníhēi] – the world has many names for the Bavarian capital. While this speaks of its diversity, it doesn’t prove it. TARGET With this white-paper-style publication, we therefore want to explore the question of how well Munich, as a capital city, is positioned regarding the future topics of innovation and entrepreneurship. The paper thereby aims to contribute to the debate on the development of Munich’s innovation ecosystem, adding to and expanding this discourse. In doing so, we deliberately seek to go beyond existing location descriptions and analyses when it comes to the economic performance of the region and look at Munich from different perspectives that are relevant for social development. As part of this approach, we will also refer to the citizens’ dialog and current debates on how urban society would like to shape significant core issues of the future. PARTNERS To live up to this aspiration, a consortium has been formed: The auditing and consulting firm PricewaterhouseCoopers GmbH WPG (PwC) and MUC SUMMIT GmbH, which is working with many other players on implementing Munich’s innovation ecosystem, have joined forces to co-author this paper. APPROACH The study has been published as a white paper as it represents a snapshot of the ever- changing social and economic reality of a metropolis. It is based on an assessment of high-quality technical information in the form of interviews and document analysis, and aims to provide recommendations for action and solutions to problems. We focus on the conditions and criteria for the emergence of innovation by entrepreneurial means. The respective opening question is therefore: Is Munich particularly well suited for innovation? To answer this question, we have phrased seven propositions in the form of the following statements: • Munich is a tech hub. • Munich is a strong research location. • Munich is a strong business location. • Munich possesses a broad network. • Munich offers a high quality of life. • Munich has a large amount of innovation capital at its disposal. • Munich can play a pioneering role in achieving the UN SDGs. We have derived these statements from the established literature on Munich as a business location. To verify them, we evaluated existing material in a text analysis. The material included annual economic reports, studies on regional competitiveness, surveys of startups and company representatives as well as statistical data. On this empirical basis, we developed a questionnaire for expert interviews. We conducted in-depth, approxi- mately one-hour-long expert interviews with ten interviewees. To do justice to the multiple perspectives, we chose decision-makers from a variety of sectors as interview partners: startups and technology groups, research institutions and professional chambers. 6
The results presented in the following pages enable us to identify structures within the Munich ecosystem and
to place the above statements in an empirical context. It has become clear that enormous innovation poten-
tial exists in the metropolis that is Munich. We will discuss the extent to which this potential is being exploited
already, and how it can – or should – be exploited in the future. Furthermore, we will establish connections to
other attractive economic regions and derive recommendations for the most important fields of action.
The following illustration shows an ecosystem geared toward joint value creation. The goal is to create value
for all stakeholders involved through the mutual use of the involved players’ resources.
ECOSYSTEMS
VALUE CREATION Mobility
Core
Acquisition
Housing
Cooperation Investment
Incubation Development
Financial
needs
Vision
CULTURE
ADDITIONAL
SERVICES
Services
Fig. 1: Value creation process in ecosystems 2
2
Our own representation, loosely based on: https://www.baloise.com/de/home/news-stories/top-themen/oekosysteme.html 7PROPOSITION 1 MUNICH IS
A TECH HUB
TEASER Digital and technology companies often settle in cities in high concentrations. This results in a
cluster formation known as a tech hub. Many of the features of a tech hub that characterize an outstanding
environment for technology startups can be found in the Bavarian capital.
“When we founded inveox in Munich we knew that we were joining a vibrant and diverse tech community,
including startups such as ProGlove and Kronos Solar, and medtech companies such as inveox, as well as
globally active tech innovators and, thanks to the Technical University and LMU, a strong local research
base as well.” Mara und Dominik Sievert, inveox
POLICY LEVEL The emergence of new technologies and their commercialization in a business context takes
more than just bright minds trained at Munich’s renowned technical colleges and universities3 (Proposition 2, see
Research location) – the infrastructure of the City of Munich also plays a major role in the establishment of a tech
hub. With its proximity to Europe’s only 5-star airport, Munich not only provides a gateway to 266 destinations
in 74 countries around the world,4 but its tightly meshed mass transit network also makes in-person business
meetings quick and easy. The city’s digital infrastructure is equally remarkable: Unlike suburban or rural regions,
Munich has almost complete LTE network coverage.5 Major research and development institutions, such as the
Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V. and the Fraunhofer-Gesellschaft zur Förderung
der angewandten Forschung e.V., are based in Munich and continuously supply the location with the latest scien-
tific findings and their transfer into business practice. In addition, research and development departments of local
companies define the framework conditions for Munich as a tech hub.6 Last but not least, the proximity to other
burgeoning regions in Bavaria – and to the economically strong neighbors Switzerland
and Austria – plays a significant role, too.7
The political contribution is essential. Currently, Munich is already a hub for the insurance, mobility and biotech
industries, largely due to the many local companies and corporations from those respective industries. Thanks
to funding from the German Federal Ministry of Education and Research (BMBF), Munich now also has the
potential to become a center for artificial intelligence (AI): with the help of the BMBF, the Munich Center for
Machine Learning8 has now been established with 22 new chairs at the Ludwig-Maximilian-University (LMU)
and the Technical University of Munich (TUM).9 Munich is also home to one of three Bavarian cross-reality
hubs (XR), in which the Bavarian State Ministry for Digital Affairs has been investing €1.5 million annually since
2020.10,11 Last but not least, the Free State of Bavaria has developed its own aerospace strategy: Bavaria One.
Europe’s largest aerospace department is to be established in the region, for which the state government is
3
https://www.pwc.de/de/branchen-und-markte/start-up-monitor-dsm-2020.pdf, p. 52
4
https://www.munich-airport.de/
5
https://www.toptarif.de/handy/wissen/handynetz-muenchen/#:~:text=Die%20Netzabdeckung%20von%20Vodafone%20in%20
M%C3%BCnchen&text=Eine%20LTE%2DVerbindung%20(4G)%20mit%20einer%20maximalen%20Geschwindigkeit%20von,%2DVerbin-
dung%20(4G)%20m%C3%B6glich.
6
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
7
https://www.tmf-group.com/-/media/files/publications/2014/eu-tech-hubs-whitepaper_ger_final.pdf?la=en
8
https://www.tmf-group.com/-/media/files/publications/2014/eu-tech-hubs-whitepaper_ger_final.pdf?la=en
9
http://www.wirtschaft-muenchen.de/publikationen/pdfs/de_factsandfigures_2020.pdf, p.9
10
https://www.invest-in-bavaria.com/blog/beitrag/staatsregierung-verstaerkt-foerderung-von-virtual-reality-in-bayern.html
11
https://xrhub-bavaria.de/ueber-uns/
12
https://www.bavarian-space-agency.de/bavaria-one/
8planning on spending €700 million.12
A project of this size has the potential to generate many more innovations and technological developments
that will consolidate Munich’s position as a tech hub.
Proximity to Excellent transport
established and IT infrastructure
universities
8 1
Easy access to a Technological infrastructure
pool of talented
young employees 7 2 through local, large national
and multinational companies
Campus facilities and
shared workspaces 6 3 Availability of funding
and tax incentives
5 4
Many ICT Fast growth
activities
Fig. 2: Essential advantages enabling Munich to position itself as a tech hub 13
CORPORATE LEVEL As a tech hub, the Bavarian capital is currently characterized by a high number of
employees in the information and communications technology sectors.14 Munich was even named the best
ICT location in Europe in an EU study.15 Relevant companies located in Munich include Unicorn, founded by
TUM students in 2011, and now Decacorn Celonis, which sells process mining software worldwide, as well as
global corporations such as Cisco, Huawei and Salesforce.16 Last but not least, the presence of all five of the
largest technology companies in the world confirms Munich as a tech hub: Apple, Amazon, Google (Alphabet),
Microsoft and IBM are all represented with important sites in Munich.17
Global player Google is currently planning and building an additional development center right in the city
center, thereby creating some 1,500 additional jobs. On the site of the historic Arnulfpost office, work
will soon commence around such topics as data protection, further development of the open web and the
Google Cloud. At its Munich site, Google is also pursuing its goal of becoming completely carbon-neutral
from 2030 onward, having already been carbon-neutral as a company worldwide since 2007.18
13
Our own representation
14
http://www.wirtschaft-muenchen.de/publikationen/pdfs/de_factsandfigures_2020.pdf, S.11
15
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
16
http://www.wirtschaft-muenchen.de/publikationen/pdfs/de_factsandfigures_2020.pdf, S.1315 http://www.wirtschaft-muenchen.de/publika-
tionen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
17
https://www.gevestor.de/details/die-5-groessten-hightech-unternehmen-der-welt-712322.html
18
https://about.google/intl/ALL_de/stories/arnulfpost/
9With its LabCampus, the Munich Airport site also joins the ranks as a further location for the innovation centers sprouting up. At the LabCampus, joint innovation projects are to be driven forward across all sectors and company sizes – all the way from development and testing to presentation and implementation. Re- nowned partners such as the Fraunhofer Institute for Integrated Circuits IIS, German Entrepreneurship and Bayern Innovativ are supporting this concept, which is currently under development.19 Finally, Apple’s recent announcement that it will invest more heavily in the Bavarian capital sends a strong signal in favor of Munich as an innovation hub: In addition to its Bavarian Design Center, established in 2015, Apple wants to set up the European Silicon Design Center as an additional base for its development teams. Its primary focus will be on 5G and mobile technologies of the future.20 The strong presence of these key companies promotes the development of many digitization trends, such as the internet of things (IoT), where successful startups like ProGlove or Magazino are also involved.21 STARTUPS In Germany, the City of Munich is a front-runner, just behind Berlin, with 1,300 information and communications technology (ICT) startups per year – equivalent to around 9% of all German startups. Munich even leads the field in terms of the number of employees in ICT startups.22 Most importantly, the quality of the startup ecosystem attracts founders: More than 75% of founders appreciate the quality of the network that exists for them locally for finding investors, exchanging ideas and setting up collaborations.23 On the other hand, large companies setting up divisions and subsidiaries to team up with innovative founders are also seeking proximity to Munich. One such company is Intel: The Intel Ignite program, which originated in the startup country of Israel, supports young companies in their development. To do so, Intel and other industry experts support ten selected startups for twelve weeks. Participants are given access to technology, management and specialist expertise as well as a broad business network. Stephan Heller, Managing Director of Intel Ignite in Europe, explains: “There’s a reason why Intel chose Munich as its European location for Intel Ignite. For one thing, we sense that a great deal of technology development creativity still exists in the region. What’s more, from here we also have the potential to support startups throughout Europe thanks to highly qualified specialists, a great deal of expertise and a strong network.” At the same time, the hustle and bustle of the location also comes with challenges: For example, many start- ups struggle with the high rent prices in Munich. In some cases, startups relocated after the financial support ended. For this reason, the City of Munich is actively promoting the location. With the Munich Technology Cen- ter (MTZ), it provides startup assistance for founders. The Munich Urban Colab offers another ray of hope for startups. Opened by the city in the creative quarter in cooperation with UnternehmerTUM as a new innovation and startup center, it will also provide affordable office space for startups, among other things.24 At the same time, more and more subcenters are currently being created, especially in the city’s east end. CONCLUSION With its renowned colleges and universities, a large and concentrated business environ- ment and a strong startup ecosystem, the state capital excels both nationwide and in the EU, definitively earning the title “tech hub.” The strong presence and settlement of individual key companies also strengthens Munich as an internationally recognized tech location. However, many projects are only just emerging, and key players such as funding institutions and investors are 19 https://www.labcampus.de/ 20 https://www.apple.com/uk/newsroom/2021/03/apple-to-invest-over-1-billion-euros-in-germany-with-new-munich-campus/ 21 https://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf 22 https://www.muenchen.de/rathaus/wirtschaft/branchen/medien-informations-kommunikationsbranche-iuk.html 23 http://www.wirtschaft-muenchen.de/publikationen/pdfs/Forschungs-und-Innovationsbericht-muenchen-2020.pdf, p. 7 24 http://www.wirtschaft-muenchen.de/publikationen/pdfs/Forschungs-und-Innovationsbericht-muenchen-2020.pdf, p. 7 10
currently beginning to develop an understanding of their leading role in Munich. In order to further strengthen
Munich as a leading tech hub in the future, especially internationally, current and future projects need to be
jointly promoted and implemented in the innovation ecosystem.
11PROPOSITION 2 MUNICH IS A STRONG
RESEARCH LOCATION
TEASER It’s no longer a well-kept secret: Munich is a unique research location. It makes it into Europe’s top
10 in 27 out of 35 of the most important innovation fields examined – an unrivaled result in terms of diversity
and performance strength.25
NUMBER OF TECHNOLOGY AREAS IN WHICH
THE REGION RANKS AMONG EUROPE’S TOP 10
MUNICH 27
ZURICH 19
PARIS 18
SOUTHEAST-NORTH-BRABANT 15
BERLIN 15
Fig. 3: Number of technology areas 26,27
A study conducted by Prognos on behalf of the state capital has identified the following technology
areas in which Munich particularly excels. They read like a Who’s Who of the future economy:
• Information and communication technologies
• Life sciences and biotechnology
• Aerospace
• Automotive
• Environmental economy
• Creative industries
• Fintech
• Insurtech
A strong networking of research and business are the driving force behind this excellent positioning.
25
https://www.muenchen.de/rathaus/Stadtverwaltung/Referat-fuer-Arbeit-und-Wirtschaft/News/studie-wissenschaftsstandort.html
26
Our own representation according to data from Prognos and Schmoch as well as https://www.wipo.int/export/sites/www/ipstats/en/sta-
tistics/patents/pdf/wipo_ipc_technology.pdf
27
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Innovations-und-Wissenschaftsstandort19-kurz.pdf
12POLICY LEVEL When Prof. Dr. Andreas Felix von Oefele, head of the court library, pushed for the establish-
ment of the Bavarian Academy of Sciences in the late 18th century, he could not have known that one day al-
most 40% of Bavarian students would enroll here – or that Munich would have the highest density of non-uni-
versity and state research institutions in the country. Today, the Fraunhofer Gesellschaft and the Max Planck
Gesellschaft are headquartered in the Munich region and operate additional institutes in the region, too, as
do the Helmholtz Gesellschaft und the Leibniz Gemeinschaft. The Munich region is home to three universities
and 13 institutions of higher education with some 120,000 students in total. The greater metropolitan region
boasts 29 universities and almost 170,000 students.28 Nearly 70 main and secondary locations of non-univer-
sity research institutions are located here, which makes for an unusually high density of scientific potential and
brain power. The two major universities, LMU Munich and the Technical University of Munich (TUM), as well as
the Munich University of Applied Sciences stand out as beacons. Both universities have repeatedly received
national awards as universities of excellence29 and occupy top positions in numerous international rankings30,
while the Munich University of Applied Sciences even ranks first in its category in national comparisons.31
STUDENTS AT MUNICH’S INSTITUTIONS OF HIGHER EDUCATION
Fall semester 2018/19
51 164
40 623
131.006 students 17 987 17 952
in Munich, 26,401 3 271
of which are from
foreign countries
(20.2%)
Ludwig-Maximilian- Technical University University of Universität Further
University (LMU) of Munich (TUM) Applied Sciences der Bundes- institutions
Munich wehr Munich of higher
(University of the education
Federal Armed
Forces)
Fig. 4: Students at Munich’s institutions of higher education 32
Important internationally competitive research fields are also being advanced in Munich’s clusters of excel-
lence across disciplines and in university alliances. The Origin and Structure of the Universe cluster at TUM
and the Nanosystems Initiative Munich (NIM) at LMU are two such clusters. Institutions such as the Digital
Innovation Hub (formerly the Center for Digitalization Bavaria)33 or alliances initiated jointly by research and
industry, such as bavAIRia, the BICCnet or BioM, create a catalytic effect for further research and startup
activities. In this context, it is also worth mentioning the Munich-based Max Planck Institute for Innovation and
Competition.
“Munich’s excellent universities with their entrepreneurial orientation, including TUM, LMU, HM and
UniBW, offer ideal conditions for positioning Munich as an entrepreneurial ecosystem.”
Prof. Dr. Klaus Sailer, Strascheg Center for Entrepreneurship
28
https://www.metropolregion-muenchen.eu/region/wissenschaftsstandort/
29
https://www.dfg.de/foerderung/exzellenzstrategie/index.html
30
https://www.timeshighereducation.com/world-university-rankings/2021/world-ranking#!/page/1/length/25/sort_by/rank/sort_order/asc/
cols/stats
31
https://www.hm.edu/sekundaer_navigation/presse/pressemitteilungen_1/detail_148097.de.html
32
Bayerisches Landesamt für Statistik und Datenverarbeitung
33
https://www.bayern-innovativ.de
13Data suggests that this academic environment in Munich is particularly good at implementing the three coope- ration strategies34 identified by Gaan, Montresor & Eisenberg in a publication by the World Economic Forum: 1) New formats of cooperation are systematically developed: from the industry clusters mentioned above to spin-off activities or startup accelerators all the way to systematic talent-sharing strategies, innovation is crea- ted continuously; 2) The Martinsried Innovation and Startup Center and the Media Lab Bavaria are examples of technology networking with the social sciences; 35 3) The flexibility and speed of the startup centers have been significantly increased and prove particularly effective thanks to the cooperation of the Bavarian Re- search Alliance, university transfer offices and professional chambers. STARTUPS It is therefore hardly surprising that one in five Munich startups has already established a colla- boration with research institutions. This is above the German average of 16%.36 And this is also due to the ex- cellent infrastructure of the local startup support institutions. For example, the German Accelerator, implemen- ted by German Entrepreneurship with headquarters in Munich, supports German startups in their international expansion within the framework of various program offerings and is funded by the German Federal Ministry for Economic Affairs and Energy. The Munich University of Applied Sciences with its associated institute, the Strascheg Center for Entrepreneurship and the Technical University of Munich, flanked by UnternehmerTUM, have played a leading role in the Stifterverband’s Gründerradar national ranking for years.37 Together with LMU Munich, which also ranks among the top-5 startup universities in Germany according to Startup-Monitor,38 Munich’s academic environment offers a unique support system and ideal conditions for startups and spin- offs. More than 120 startups emerge annually from these three centers alone. Furthermore, HM, LMU and TUM were successful with their joint application thanks to funding from the EXIST Potentials initiative of the Federal Ministry for Economic Affairs and Energy. It objective is to attract international talent and startups with scalable business models so as to anchor innovations with added social value in the Munich ecosystem. Another example of cross-university collaboration: LMU and TUM have launched the Center for Digital Tech- nology and Management (CDTM) – the CDTM39 becomes visible in the form of numerous well-known startups such as Personio or CliniServe, founded by the “Centerlings” (CDTM alumni). A large network of smaller and often highly specialized universities and private institutions also exists. For this reason, the Munich ecosystem possesses excellent educational opportunities for future talent and founders and attracts students. Not only does Munich have an above-average density of university graduates (> 32%), but the distribution among the promising MINT (MINT: mathematics, IT (computer sciences), natural sciences, technology) subjects (> 40%) and medicine (8%) is also remarkable40 and is reflected in Munich’s good rating.41 CORPORATE LEVEL Early on, the Bavarian state government focused on the promotion and settlement of science and research institutions with the goal of achieving a significant incidence effect for economic development and the settlement of key technologies.42 To this end, the state capital has promoted the settle- ment of additional scientific institutions and the secondary trades surrounding them for years now. This public innovation policy is complemented by extensive business research and development facilities, such as the FIZ, BMW’s research and innovation center, with some 15,000 employees. In the areas of environmental tech- nology, fintech or information technology, progress has also been made in a structured fashion (for more infor- mation, see the “Munich as a tech hub” section). The high density of corporate headquarters of DAX, M-DAX 34 https://www.weforum.org/agenda/2018/11/3-ways-to-nurture-collaboration-between-universities-and-industry/ 35 An overview: https://www.ihk-muenchen.de/de/Service/Gründung/Netzwerke-Kooperationen/Inkubatoren-und-Acceleratoren.html 36 https://www.pwc.de/de/pressemitteilungen/2017/umfrage-start-up-unternehmen-muenchen-2017.pdf 37 https://www.gruendungsradar.de/gesamtranking/grosse-hochschulen 38 https://deutscherstartupmonitor.de 39 Gespräch mit Andrea Hofmann (Lab Campus) 40 http://www.wirtschaft-muenchen.de/publikationen/pdfs/Innovations-und-Wissenschaftsstandort19.pdf 41 https://www2.deloitte.com/content/dam/Deloitte/de/Documents/Innovation/Tech-Standorte-Deutschland-Ranking-Deloitte-2018.pdf 42 https://www.ihk-muenchen.de/ihk/documents/Innovation/FuE-Report_Langversion_finweb.pdf 14
or Tech-DAX companies43, supplemented by the European headquarters of international ICT groups, results in
an extraordinary concentration of company-based research and development in the Bavarian capital, which is
naturally well-networked with the universities and scientific institutions.
CONCLUSION Against this background, Andreas von Oefele might be quite satisfied with the seed he sowed
over 200 years ago. In a unique mix, Munich brings together the high academic density of small university
towns with big-city appeal and institutional density.
43
http://www.wirtschaft-muenchen.de/publikationen/pdfs/boersennotierte_unternehmen_d.pdf
15PROPOSITION 3 MUNICH IS A STRONG
BUSINESS LOCATION
TEASER According to a new study by Bavarian business association vbw, Germany ranks fourth worldwide
among the countries with the best conditions for industrial companies.44 Of course, this is also true for Munich.
In fact, Munich is particularly strong in this regard. But what is it exactly that makes Munich such a good busi-
ness location?
“Many still associate Munich primarily with soccer and the Oktoberfest – and don’t see it as an innovation
hub. That’s something we still have to work on. Thanks to its proximity to large industries and DAX com-
panies, however, Munich is very visible indeed.”
Gabirle Böhmer, Munich Startup
POLICY LEVEL In particular, Munich is characterized by exceptional competitive ratios and an outstanding
industry mix. The city accounts for just under 19% of the total GDP in Bavaria, and if the surrounding area is
included, this rate increases to 31.4%. Purchasing power in Munich is also about 38% above the national aver-
age. The unemployment rate in the Munich region is 3.3%, well below the national rate of 5%.45 However, the
most significant factor is probably the previously mentioned industry mix, also known as the “Munich mix” 46,
which consists of a balanced composition of large companies, medium-sized companies, startups as well
as traditional craft businesses. Relevant industries include information and communication technologies,
services, research and knowledge-intensive industries – especially life sciences, medical and environmental
technologies – as well as the cultural and creative industries. Munich is also the largest insurance location in
Germany and the second most important German banking center after Frankfurt a. M.
Munich is also known as the “DAX capital” with six of the 40 DAX-listed companies headquartered in Munich.
These include Allianz, BMW, Munich RE, Siemens, MTU Aero Engines AG and Infineon Technologies (Neubib-
erg).47 Considering all these companies together, it becomes apparent that most of them have a tech focus. In
the MDAX, Munich is clearly a frontrunner with 12 companies.48 Munich also boasts six companies in the Tec
DAX.49 In addition to these traditional DAX companies, more and more foreign high-tech companies are also
settling in Munich, such as Google (since 2007), which is currently building new headquarters in Munich, as
well as Apple, Microsoft, IBM, Oracle, Cisco and Huawei.50 There is a clear trend toward strong growth in the
(high-)tech sector in and around Munich.
With Messe München, Munich is also an international trade fair hub and attracts numerous industry giants –
including analytica, BAUMA, electronica, EXPO REAL, Intersolar, ispo and MATERIALICA – to Munich with its
leading trade fairs. In addition, IAA Mobility will be held in Munich for the first time in 2021.51
44
https://www.sueddeutsche.de/wirtschaft/industrie-muenchen-studie-deutschland-unter-den-top-industriestandorten-dpa.urn-newsml-
dpa-com-20090101-190823-99-573180
45
http://www.wirtschaft-muenchen.de/publikationen/pdfs/de_factsandfigures_2020.pdf
46
Conversation with Gabriele Böhmer (Munich Startup)
47
https://www.muenchen.de/rathaus/wirtschaft/wirtschaftsstandort/wirtschaftsstruktur/dax-unternehmen-muenchen.html
48
http://www.wirtschaft-muenchen.de/publikationen/pdfs/boersennotierte_unternehmen_d.pdf
49
http://www.wirtschaft-muenchen.de/publikationen/pdfs/boersennotierte_unternehmen_d.pdf
50
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
51
https://messe-muenchen.de/de/technisches/veranstaltungen/iaa-mobility-2021.php
16Life sciences Aerospace
25,000 15,000
employees employees
Automotive
128,500
employees
Business-related
services
Handicrafts 210,000
employees
76,700
employees
Cultural and
creative industries
179,000 Information and
employees telecommunications
technology
118,600
employees
IX
M
C H
NI
Financial sector:
not specified
M U
THE
Fig. 5: The Munich mix – a multilayered economic structure52
CORPORATE LEVEL A closer look at companies in Munich reveals that the city is particularly well positio-
ned in the automotive and information and communications technology sectors, as well as in business-rela-
ted services such as insurance. In total, some 460,000 people are employed in these areas in around 46,700
companies. The close proximity of companies along various stages of the value chain, such as suppliers and
end manufacturers, is a particular advantage of the location, along with a wide range of opportunities for colla-
borations with universities and research institutions. Furthermore, the mix of industrial and service companies
as well as the proximity to important customers benefit the work of these sectors.
Munich is also Germany’s most important insurance location, and the consulting sector has a formative pre-
sence here, too. Last but not least, the city is characterized by being the most significant location for (patent)
law firms, which is due, in particular, to the large number of tech companies there. A further 210,000 people or
so are employed in these sectors in Munich. The aerospace industry is also worth mentioning, as it is of spe-
cial historical significance in Munich. In that field, production alone generates some €10 billion in sales, and
with Airbus, MTU Aero Engines and Premium Aerotec, three world-class companies are located there. In this
context, the largest aerospace department of its kind in Europe is being established at the Technical Universi-
ty of Munich (TUM). Such activities also consolidate Munich’s reputation as an industrial location.53
52
Our own representation loosely based on: http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
53
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
17“Through our activities, we aim to develop Munich as a location for the long term, attract talent with valuable and scalable business models as well as identify potentials and synergies between startups, universities, corporations and the public sector. This way, we can actively shape collaborations across sectors and bring together the right partners in networks.” Frizzi Engler-Hamm, MUC SUMMIT STARTUPS As a strong business and industrial location, Munich is highly relevant for the settlement of start- ups. Many large industrial companies enrich their innovation areas with the expertise arising from startups and then enter into joint ventures and collaborations with them. The same applies to the major educational institu- tions in the metropolitan region: They actively promote startups and spin-offs from the science and research field.54 For example, the “BMW Startup Garage” was created as part of the company’s startup promotion program, through which the group aims to use the knowledge of particularly innovative startups for itself. The “TechFounders” accelerator program for technology startups was created in collaboration with the Technical University of Munich (TUM).55 Likewise, industry-specific offerings are emerging such as the Drink Innovation Campus (DICA) accelerator program of the Strascheg Center for Entrepreneurship and the Weihenstephan Food Startup Incubator, in which the innovation ecosystem of the beverage industry and the innovative power of startups are brought together with product and market know-how from established companies.56 Initiatives such as these are certainly one of the reasons why Munich is also a relevant location for the startup scene. To further promote networking, the Insurance Industry Hub and the Mobility Hub as well as the BioM biotech cluster have been launched in Munich. There are also plans to make Munich the Bavarian center for artificial intelligence (AI), with the “Mission Institute for AI” and 22 new AI chairs at the LMU and TUM universities.57 CONCLUSION Munich is not just extremely strong as a business location, but also as an industrial site, es- pecially in the technology sector. The strong networking between industry, startups and scientific institutions is to be emphasized, as it makes the Bavarian capital particularly interesting for startups. Although Munich is making big steps forward in terms of networking, e.g., in the form of new hubs, there still seems to be further potential for expansion in terms of vertical integration and cross-industry networking. Frizzi Engler-Hamm, Managing Director of MUC SUMMIT, tells us, “As part of the MUST initiative – the Munich Innovation Ecosys- tem – the MUC SUMMIT GmbH has taken on the task of cross-industry networking, among other things, in order to further strengthen Munich as a business location, both nationally and internationally, together with stakeholders from the public sector, business, science and the startup scene.” 54 https://www.businessinsider.de/gruenderszene/allgemein/bmw-i-ventures-investment-caroobi/ 55 https://gruenderfreunde.de/bmw-setzt-verstaerkt-auf-startup-trend/ 56 vgl. www.drinkinnovation.de & https://fsiws.com 57 http://www.wirtschaft-muenchen.de/publikationen/pdfs/de_factsandfigures_2020.pdf 18
MUNICH POSSESSES A HIGH PROPOSITION 4
DEGREE OF NETWORKING
AMONG ITS STAKEHOLDER
GROUPS
TEASER The proverbial Bavarian Gemütlichkeit (conviviality) is considered the ideal prerequisite for the
networking and coming together of the Munich ecosystem. For this reason, it’s hardly surprising that, in
conjunction with Oktoberfest as the largest folk festival in the world, Bits&Pretzels emerged as one of the
essential networking events of the innovation and entrepreneurship scene.
POLICY LEVEL The manageable size of the city and the high density of events and opportunities for ex-
change give the Munich tech hub an extremely solid starting position for the rapid distribution of information.
The density of players can be clearly seen on the Munich Startup’s Ecosystem Dashboard: More than 1,500
startups meet over 300 companies specifically looking to collaborate with startups and are paired with around
130 investors and a talent pool of 45,000 employees.58
“A great deal of networking already exists in Munich through MUST, Bits&Pretzels, events of the
Entrepreneurship Centers or the Startup Unit of the IHK (Chamber of Industry and Commerce).
The BCG study ‘The most innovative companies,’ identified 50 of the most innovative companies – and
40 of them are represented in Munich or Bavaria. It’s important that we bring them together and integrate
them into our stakeholder mix.”
Frank Dollendorf, IHK for Munich and Upper Bavaria
The Munich Innovation Ecosystem has a unique stakeholder mix. The MUST – The Munich Innovation Ecosys-
tem initiative brings together the most relevant stakeholders, thus promoting exchange in, by and for Munich
and making the Munich innovation ecosystem more visible, both nationally and internationally. This enables
stronger connections and synergies to emerge between business, research, startups and politics, as well as
other partners in the ecosystem, and for the location to be made more attractive for the long term.
The state capital itself, the chambers of commerce, business associations and research centers also play a
major role in this. In addition, events and trade fairs supported by the city and the state shape mutual network-
ing. For example, Digital Life Design (DLD), launched by Steffi Czerny and the Burda Media Group, has, for
over 15 years now, been the leading conference for exchange among innovative thinkers and politics, art and
science against the backdrop of the rapid digital transformation of our world. This perspective is increasingly
the focus of another very important annual conference held in Munich: the Munich Security Conference. This
forum, too, is networking to an ever-greater degree with other sectors outside the political arena, as the close
intertwining of ecology, social issues and the economy in the public sphere requires innovations from the
private and third sectors. It is precisely the supra-regional and European levels that the Startup Cities Alliance
(SCALE) addresses.59 Through a common platform, an ecosystem map and numerous other tools, the most im-
portant European technology locations can be compared with each other. Overall, SCALE has the potential for
a European response to the U.S. or Chinese startup ecosystems and will stimulate collaborations from Oslo to
Rome and from Porto to Vilnius. Munich’s central location at the heart of Europe once again becomes evident
in this context.
58
https://www.munich-startup.de/ecosystem/insights/
59
https://scalecities.com 19CORPORATE LEVEL In the international race for markets, innovations and talent, it will also be crucial for established companies to collaborate with startups so as not to be left behind.60 A BCG study examined this type of collaboration between large companies and startups and identified five collaboration instruments, all of which exist in Munich: • Innovation or digital labs: e.g., Deloitte Digital and Siemens AI Lab • Accelerators: e.g., BMW Startup Garage, Climate-KIC Accelerator • Corporate venture capital (CVC): e.g., Allianz X, BayWa r.e. Energy Ventures and HV Holtzbrinck Ventures • Partnership units: e.g., Infineon’s Inno.Wafer and Giesecke+Devrient • Incubators: Media Lab Bayern and ESA Business Incubation Centre (BIC) Bavaria Notably, around 50% of startups and companies in the DACH region are dissatisfied with existing collabora- tions while high expectations regarding processes, structures and cultures are not met.61 Thanks to a clear and generally shared idea of what collaboration goals should look like, it is suggested that a connection be established between startups and the core business of large companies. For the partners to find the right counterpart in each case and then the right addressees within the highly diversified structures of large companies, networking efforts again become necessary. “The innovation ecosystem can further benefit from efforts to become more professional, as driven by MUST, to strengthen its image, particularly when it comes to how it’s perceived internationally.” Matthias Marschall, Google Germany STARTUPS Munich is an attractive and innovation-friendly location that attracts talent and startups as well as companies from the region and from all around the world. With the MUST – The Munich Innovation Eco- system initiative – founded by UnternehmerTUM, the Strascheg Center for Entrepreneurship and German Entrepreneurship – the networking of the unique stakeholder mix can be made more and more real through formats such as the MUST Dialogue or subject-specific workshops. For this reason, the functions of market-makers and the systematic processing of knowledge resources are becoming increasingly important for content curation. Interestingly, Munich startups have been picking up on these trends for quite some time. Some of the most successful startups of recent years – the new data mining software house Celonis and recruiter Personio – offer respective solutions to their customer groups. But there is “still a great deal of room for improvement” according to the two managing directors of inveox, Maria and Dominik Sievert: “The Munich area is also home to so many more players and stakeholders – the opportunities that exist here should be made much more transparent and accessible for future entrepreneurs. Entrepreneurs shouldn’t have to need to search for suitable Munich companies to partner with. Easier access to resources and the necessary support for entrepreneurs would certainly do even more to strengthen the innovative power of Munich as a location.” CONCLUSION While the Munich innovation ecosystem is highly networked, there is still upward potential with regard to reaching the level of shared value creation. This will primarily involve connecting specialized communities such as the One Mission Initiative and the Female Investors Network and Venture Capital Club e. V. with other players. Being permeable enough to build valuable cross-connections while maintaining the identity of groups and their sense of belonging – this is a task for the future. 60 Weiblen, T., & Chesbrough, H. W. (2015). Engaging with startups to enhance corporate innovation. California Management Review, 57(2), 66–90. Abrufbar unter https://journals.sagepub.com/doi/10.1525/cmr.2015.57.2.66 61 https://www.bcg.com/publications/2019/corporate-startup-relationships-work-after-honeymoon-ends 20
MUNICH OFFERS A PROPOSITION 5
HIGH QUALITY OF LIFE
TEASER Munich is a beautiful city and boasts the largest inner-city park in the world, through which runs the
Isar River. Numerous great destinations for excursions are close by, and the city is internationally connected
via its modern airport. Munich simply abounds with quality of life.
POLICY LEVEL The quality of life in Munich is also relevant when it comes to choosing an employer or
company location. For example, nine out of ten professionals in Munich say they feel comfortable in their
region, about one in two came to the metropolitan region for professional reasons, and just under one in five
came for vocational training or studies. Reasons why people are satisfied to live and work in Munich include its
excellent public transport connections, accessibility to activities in public green spaces and parks, as well as
good everyday shopping facilities and other opportunities, such as sports and exercise, to name just a few.62
HELSINKI
OSLO
STOCKHOLM
COPENHAGEN
DUBLIN
AMSTERDAM BERLIN WARSAW
LONDON
BRUSSELS
PRAGUE
PARIS MUNICH
VIENNA
BERNE
MADRID ROME
LISBON
Fig. 6: Munich’s great network connections within the EU 63
62
https://www.pwc.de/de/standorte/muenchen-und-umland-auswirkungen-hoher-mieten.pdf
63
Our own representation, loosely based on: https://www.lmu.de/de/die-lmu/die-lmu-auf-einen-blick/die-lmu-muenchen/index.html
21In addition to these factors, Munich offers a varied cultural and gastronomic milieu. According to the EU Com-
mission’s 2019 Cultural & Creative Cities Monitor, Munich ranks second in this category, just behind Paris. The
theater and opera scene boasts five state-run, 50 private and three municipal stages.64 Certainly, the home
of the most successful German soccer club, FC Bayern Munich, is also an attractive factor for many people.
Among other things, Munich offers cultural diversity and exciting international exchange – about 28% of all
people living in Munich come from abroad. People from some 180 countries live there – making the city an
international hotspot.65 The large number of expatriates in Munich is also an indication of Munich’s pioneering
role when it comes to quality of life in Germany.
A cause for concern for the 1.47 million residents, however, is the steady trend toward rising prices for houses
and apartments, even in times of crisis.66 Lack of affordable housing has been a perennial issue in Munich for
some 30 years now. With the Bavarian State Office of Statistics predicting that the population will grow to 1.67
million by 2038, it certainly doesn’t look like the situation is going to ease any time soon.67 In Germany, the
average share of rent in household incomes is around 20.6%.68 In Munich, this figure lies at 29.5% on average,
which corresponds to 18.61 euros per square meter.69 Particularly for people with low incomes or those just
starting out their careers, the figure is likely to be significantly higher. In the case of home ownership, the
Munich disparity is even more pronounced by comparisont.70
Munich continues to be Germany’s frontrunner when it comes to housing costs and is in the same league as
other major international cities.
RENT LOAD BY HOUSING SITUATION IN MUNICH
Median in % of net household income from 10,000 people surveyed
SINGLE PARENT WITH CHILDREN 37
SINGLE 31
WITH CHILDREN 28
SHARED APARTMENT 27
WITH PARTNER 25
IN GERMANY IN MUNICH
Fig. 7: Rent load by housing situation in the City of Munich 71
64
https://exporo.de/standortanalyse/muenchen/
65
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
66
http://www.kommunalreferat-muenchen.de/gaa/immo/analysen/index.htm
67
https://aigner-immobilien.de/download-muenchner-immobilien-marktbericht-20-21/?ref=AdW-SU-Marktbericht-2021&gclid=EAIaIQob-
ChMIwPKBl6Cj7wIVGuJ3Ch3oDglgEAAYASAAEgKDj_D_BwE
68
https://de.statista.com/statistik/daten/studie/459578/umfrage/mietanteil-am-haushaltseinkommen-privater-haushalte-in-deutsch-
land/#:~:text=Im%20Jahr%202019%20belief%20sich,auf%20etwa%2020%2C6%20Prozent.
69
https://de.statista.com/infografik/20131/anteil-der-miete-am-gehalt-in-grossstaedten-in-ost-und-west/
70
https://de.statista.com/statistik/daten/studie/6654/umfrage/immobilienpreise-fuer-eigentumswohnungen-in-deutschen-staedten-2008/
71
https://projekte.sueddeutsche.de/artikel/muenchen/meinemiete-so-stark-belastet-die-miete-die-muenchner-e807307/
22CORPORATE LEVEL The housing issue is also relevant for employers. Maria and Dominik Sievert, who
founded inveox in 2017, complain: “[Complicated formalities] – and not least the high cost of living in Munich –
make it difficult to attract talent, from both the local and international labor markets.” Nevertheless, Munich is
an attractive place for companies and their employees for a variety of reasons. Infrastructure and connected-
ness appear to be extremely relevant as a location factor. Munich has excellent public transport connections.
Munich’s main train station is one of the busiest in Germany. In particular, the new high-speed rail line from
Munich to Berlin makes life easier for business travelers – a further plus in terms of attractiveness.72 Munich
Airport offers excellent international connections for business travelers in particular and is THE central factor
when it comes to city accessibility. A passenger survey has now named Munich’s Franz-Josef Strauss Airport
the best airport in Europe for the 12th time, and in the global ranking, it comes in fifth. However, the significant
volume of cars and commuters continues to pose major challenges for the city and professionals from the
surrounding area and will continue to be the subject of public debate for some time to come.
The extraordinary stakeholder mix also makes Munich an interesting place. Last but not least, the city, which
plans to invest almost €10 billion by 2023 to promote infrastructure, schools, daycare centers and the like, as
well as climate protection,74 itself shapes the Munich lifestyle.
STARTUPS Munich’s international flair is of particular interest to startups. Approximately 46% of all employ-
ees in startups come from abroad, and about 11.5% of all founders possess foreign citizenship. This also means
that while their working language is often still German, English has already become established in 42.5% of
all startups. A good work-life balance and a fulfilling private life are particularly important to younger genera-
tions, as is job satisfaction, which makes a city like Munich, with its diverse opportunities, an ideal location – if
you can afford it.75 Office space is not exempt from the constant price increases and is a scarce commodity in
Munich. The vacancy rate is almost zero. Those looking to relocate to Munich face a similar problem as those
looking for housing. Presumably this will remain the same in the post-pandemic era as well.77
At the end of the day, startup founders certainly choose Munich to benefit from the stakeholder mix and excel-
lent connections as well as to recruit all the well-educated students from the local universities.
CONCLUSION Munich offers its inhabitants as well as its companies an extraordinary mix of amenities and
has thereby grown into a significant location, especially for startups. However, the housing situation may deter
some and is an area where Munich must become more attractive, particularly for younger people and the
creative scene.
72
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Wirtschaftsstandort_Muenchen_d.pdf
73
https://www.muenchen.de/rathaus/wirtschaft/wirtschaftsstandort/infrastruktur.html
74
http://www.wirtschaft-muenchen.de/publikationen/pdfs/Jahreswirtschaftsbericht-muenchen-2019.pdf
75
https://www.pwc.de/de/branchen-und-markte/start-up-monitor-dsm-2020.pdf
76
https://unternehmer.de/lexikon/online-marketing-lexikon/generation-y-millennials#:~:text=Merkmale%20der%20Generation%20
Y%2F%20Millennials&text=Sie%20haben%20sowohl%20den%20gro%C3%9Fen,dem%20Internet%20zu%20ihrem%20Alltag.
77
https://aigner-immobilien.de/download-muenchner-immobilien-marktbericht-20-21/?ref=AdW-SU-Marktbericht-2021&gclid=EAIaIQob-
ChMIwPKBl6Cj7wIVGuJ3Ch3oDglgEAAYASAAEgKDj_D_BwE
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